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Blackwater’s Loss is DynCorp’s (DCP) Gain

February 03, 2009 | About:

INVESTMENTU

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Last week, Blackwater Worldwide received the bad news that the U.S. Government could not renew its contract after the Iraqi government refused to renew its license to operate in their country. The decision stems from the 2007 incident where Blackwater security guards fired on, and killed 17 Iraqis in a disputed who-shot-first incident.

But their bad news could be investor’s gain.

Including Blackwater, the State Department uses three separate security contractors in Iraq. The only competition for the coveted security contracts now rests with Triple Canopy and DynCorp International (DCP). For investors, DynCorp is the only publicly listed company of the three.

Before you think a few extra security guards in Iraq can’t be that expensive, consider that there are thousands of private security contractors in Iraq. They protect everything from government personnel to corporate executives and buildings, earning thousands a day. Blackwater’s contract in Iraq was worth nearly $2 billion – despite its poor performance reviews.

And Iraq isn’t the only hotspot these companies operate in. There are dozens of other hotspots around the world for private security contractors to “clean up” in – like Afghanistan’s reconstruction.

Research Team

INVESTMENTU

www.investmentu.com

About the author:

INVESTMENTU

My name is Ben C. and I am 2nd year MBA candidate at the Anderson School of Business at the University of California- Los Angeles. I have a BS in Economics from the Wharton School of Business at the University of Pennsylvania. Before coming to Anderson I worked as a generalist equity research analyst for Right Wall Capital, a long-short equity hedge fund located in New York City. Prior to working at Right Wall I worked as an analyst at Blue Ram Capital, another long-short equity hedge fund located in Rye Brook, NY. This past summer, I worked for West Coast Asset Management as a research analyst. West Coast, which was co-founded by Kinko’s founder Paul Orfalea, is run by well-known value investors Lance Helfert and Atticus Lowe.



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